Why Chinese Security Contractors Aren't Coming to Indonesia (Yet)

by: Deni Yupinto Dinopit, S.IP

In Central Sulawesi, there is a massive nickel processing complex that employs around 85,000 workers and is backed by over 34 billion dollars in investment. Indonesia Morowali Industrial Park (IMIP) produces materials for electric vehicle batteries for global markets, with the majority of production held by the Chinese-owned Tsingshan Group and its subsidiaries, which collectively hold around 66.25% of shares, reflecting China's ambitious overseas investment strategy to dominate the global nickel supply chain. Indonesia's nickel exports reached $33.64 billion in 2024, with China purchasing 82% of Indonesia's nickel output. The relationship creates mutual dependency but also put Indonesia vulnerable as Indonesia imports roughly 80% to 90% of its mining equipment from China, meaning Chinese firms control both the technology inputs and primary market access. Tsingshan's majority stake in IMIP exemplifies this dynamic. This economic interdependence gives Beijing implicit veto power over security arrangements: allowing Chinese PSCs would formalize an already precarious dependence, transforming economic vulnerability into subordination.

This level of Chinese investment typically comes with the Chinese security apparatus. For example, in Pakistan, Private Security Contractors (PSCs) from firms such as China Overseas Security Group permanently guard the China-Pakistan Economic Corridor (CPEC) to protect Chinese nationals working on CPEC projects, operating at sites despite Pakistan's formal ban on foreign security companies. The Myanmar junta went even further by establishing a joint security company with China to protect Belt and Road investments. The pattern is clear: where Chinese money goes, Chinese security follows. Except in Indonesia. Despite Chinese companies controlling more than 75% of Indonesia's nickel refining capacity and China purchasing 82% of Indonesia's nickel exports, Chinese PSCs have stayed away even as security threats have escalated.

Indonesia's PSC-free status reveals something important about the limits of Beijing's influence and about Indonesia's skill at accepting Chinese money without ceding sovereignty; it's a deliberate choice rooted in domestic political realities and Indonesia's refusal to become economically and militarily dependent on China.

Indonesia's legal framework offers no space for foreign private security forces. Defense and security activities are explicitly reserved for the Indonesian government and closed to foreign investment under the country's investment laws. More fundamentally, Indonesia's political culture since the fall of Suharto in 1998 has centered on asserting sovereignty and establishing civilian control over security forces. The March 2025 amendments to Indonesia's military law expanded the domestic military role in government, allowing active officers to serve in more civilian posts. Defense Minister Sjafrie Sjamsoeddin defended the expansion by emphasizing Indonesia's commitment to "maintaining the sovereignty of the Republic of Indonesia." In this context, allowing Chinese (or any foreign) armed personnel on Indonesian soil would be political suicide a direct contradiction of the sovereignty rhetoric that dominates Indonesian security discourse.

The aforementioned legal and political prohibitions have been repeatedly tested, as security threats at Chinese nickel facilities in Indonesia have already occurred. In December 2023, an explosion at IMIP killed 18 workers and sparked protests by hundreds demanding better safety standards. Just weeks earlier, violent clashes at the nearby PT Gunbuster Nickel Industry facility left two workers dead and resulted in 70 arrests. Since 2019, at least 22 workers have died at Chinese-owned nickel plants in the Morowali region, victims of industrial accidents, poor safety standards, and deteriorating labor conditions. Ethnic tensions have increased constantly, as during the February 2024 protests, videos circulated showing Chinese workers armed with iron bars and helmets trying to "defend" facilities, heightening fears of further violence. These are precisely the conditions that would prompt Chinese private security deployment elsewhere. Yet Indonesia's response has been distinctly different: over 500 Indonesian military and police personnel were deployed to restore order after the January 2023 riots without any Chinese PSCs in sight.

A sensitive historical context shapes Indonesia's choice to rely on domestic forces rather than Chinese PSCs. The May 1998 riots that accompanied the fall of Suharto's dictatorship saw widespread violence targeting Indonesia's ethnic Chinese minority, resulting in over 1,000 deaths and tens of thousands fleeing the country. While Indonesia has progressed in many respects, anti-Chinese sentiment remains a political undercurrent that any government must navigate carefully. The prospect of armed Chinese security personnel operating on Indonesian soil would be politically toxic, easily portrayed by nationalist critics as foreign interference and a surrender of sovereignty. In a country where economic resentment toward ethnic Chinese business dominance already exists, adding Chinese armed forces to protect Chinese investments would be political suicide for any administration.

Beyond historical sensitivities, Indonesia faces active sovereignty challenges with China today. In October 2024, Indonesia's maritime patrol expelled a Chinese Coast Guard vessel twice in one week after it entered Indonesia's exclusive economic zone near the Natuna Islands. China has repeatedly sent coast guard vessels into waters Indonesia considers its exclusive economic zone, sometimes demanding Indonesia stop drilling for oil and gas in areas Beijing claims as Chinese territory. Against this backdrop of ongoing maritime friction, how could any Indonesian government justify Chinese PSCs guarding nickel facilities on land while simultaneously expelling Chinese coast guard vessels from Indonesian waters? The contradiction would be impossible to defend, undermining Indonesia's carefully maintained stance as a sovereign, non-aligned power that refuses to subordinate its interests to Beijing despite deep economic ties.

The PSC issue captures Indonesia's dilemma in its relationship with China: how to maintain a lucrative economic partnership without ceding strategic autonomy. With bilateral trade hitting 135-148 billion dollars in 2024 and China as Indonesia's largest trading partner for over a decade, the economic stakes are massive. President Prabowo's 2024 state visit to Beijing yielded 10 billion dollars in new investment commitments, signaling continued economic deepening between the two countries. Simultaneously, Indonesia imposed tariffs of up to 200% on Chinese goods and is actively seeking to reduce Chinese investment in new nickel projects to qualify for U.S. tax incentives and diversify away from Beijing. The contradiction is deliberate, as Indonesia seeks Chinese capital but fears Chinese control. Allowing Chinese PSCs would cross a red line and set a harmful precedent for future Chinese investment in Indonesia and other ASEAN countries. For Beijing, pushing too hard on security presence risks poisoning a relationship worth nearly 150 billion dollars annually and undermining China's broader BRI ambitions in the largest economy in Southeast Asia. China accepts Indonesia's red line by refraining from mobilizing its PSCs, as the risk of losing access to critical minerals and to ASEAN's most influential member would be far more costly.

Indonesia has pulled off something difficult: taking massive Chinese investment while keeping Chinese security forces out. It's worked because both sides need each other: Beijing needs Indonesia's nickel, and Jakarta needs Chinese money, but won't become a client state.

But the balance only holds if Indonesia can maintain order at Chinese facilities using its own forces. Since 2019, at least 22 workers have died at Chinese nickel plants in the Morowali region alone, ranging from victims of explosions, clashes, and industrial accidents. Jakarta has managed these incidents so far by deploying the Indonesian police and military. But a single mass-casualty event could change the calculus entirely. If one incident kills dozens of Chinese workers, Beijing may demand direct security control regardless of Jakarta's objections. Similarly, if protests or violence shut down major facilities for weeks rather than days, threatening China's EV supply chains, Beijing doesn't need to threaten anything explicitly, just slow down operations, delay shipments, or redirect purchases. Indonesia has already sunk $34 billion into these facilities and created hundreds of thousands of jobs. Indonesian sovereignty concerns may matter less than economic disruption. And if Indonesian security forces can't protect Chinese assets in any crisis that arises, Jakarta's entire argument against PSCs falls apart.

For now, Indonesia shows that economic dependence doesn't have to mean security dependence. But holding this line depends on maintaining both domestic order and the political will to resist pressure from Beijing. As Chinese investment spreads beyond nickel into ports, infrastructure, and technology, the pressure will only grow. Whether Indonesia can sustain this boundary will shape not just its own relationship with China, but whether other Southeast Asian states can chart an independent path between Beijing and Washington.

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About Author

Deni Yupinto Dinopit, S.IP is an International Relations undergraduate from Andalas University. His interests include private military contractors, asymmetrical warfare, and global security dynamics.

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